The use of a three-phase multilevel converter (MLC) as an integrated cell balancer and motor driver is investigated for three-phase AC applications in EVs/HEVs/PHEVs. The paper analyzed an issue of additional battery losses caused by the flow of reactive and/or harmonic power from each power cell of the three-phase MLC battery system. The paper also investigates the size of shunt capacitor required for compensation of the losses to acceptable level. This study concludes that the size of the required capacitor is too big for the vehicle application unless some other active compensation is used as well. Another practical way to employ the MLC as a cell balancer is to use it in a cascaded connection with the conventional three-phase two-level voltage source inverter however it may not be a cost-effective solution either due to high component count.